Wall Street set for modest gains with focus on year-end

Wall Street was set for a modestly higher open on Monday as investors were wary of taking bets that could erode gains heading into year-end.

Retail stocks could get a boost after U.S. retailers posted a better performance during the 2009 holiday shopping season, with sales up 3.6 percent, as tracked by MasterCard Advisors unit SpendingPulse.

It appears retailers were doing a fair bit of discounting to bring in shoppers, so we'll see how that affects the bottom line, said Andre Bakhos, president of Princeton Financial Group in North Brunswick, New Jersey.

In the end, (spending) is going to be a sign of the economy and how the consumer is acting.

Airline stocks were pressured in premarket trading as the United States tightened airline security amid questions about how a Nigerian man with alleged ties to militants smuggled explosives aboard a transatlantic flight and attempted to blow up the plane. The system aimed at keeping air travel secure failed, the head of U.S. homeland security said Monday.

Shares of AMR Corp , the parent of American Airlines, lost 2.5 percent to $7.94 premarket, while United Airlines parent UAL Corp was down 3 percent at $12.70.

With the S&P 500 nearly 25 percent higher for the year, investors are keen to hold on to profits. Stocks rallied in a shortened preholiday session Thursday, closing at 2009 highs. Markets were closed Friday for the Christmas holiday, and Monday's volume will likely be light as many traders take off the week between Christmas and New Year's.

S&P 500 futures rose 2.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 14 points, and the Nasdaq 100 futures gained 4 points.

The economic agenda is light, with the Dallas Fed manufacturing survey for December expected at about 10:30 a.m. EST.

Shares of Compugen Ltd surged 35.5 percent to $5.53 ahead of the opening bell after the Israel-based company announced the discovery and experimental validation of a new drug target for multiple epithelial tumors.

Kraft Foods Inc could see interest as Italian chocolate major Ferrero is still examining its options on a possible bid for Britain's Cadbury PLC . The UK confectioner has rejected a $16.2 billion offer from Kraft. U.S.-based Hershey Co and the family-owned Ferrero have said they were contemplating bids.

European stocks rose for a fifth straight session on Monday, adding to gains before the Christmas break, as an overnight rally in Asian shares boosted sentiment, but volumes were thin with London markets closed.

Oil hit a four-week high, rising above $78 a barrel, as colder weather across the U.S. and fresh signs of an economic recovery helped boost the outlook for fuel demand.